Belize Water Services
Limited (BWSL) has submitted documentation to the Public Utilities
Commission (PUC) to commence a Full Tariff Review Proceeding (FTRP), as
required by Belize law, in order for the company to raise water and
sewerage rates in the country. The BWSL five-year Business Plan requires
the company "to increase its income by around 30% - a substantial portion
of the increase will need to be derived from adjustments to the existing
tariff structure." This action comes on top of the 20% rate increase
already suffered by many as a result of BWSL changing water meters from
Imperial gallons to US gallons.

According to BWSL, the investment plan documented in
their 26-page report is essential to improving service to their
customers. The water company lists a number of substantial improvements
they have accomplished over their nearly three-year transition period,
including increased water storage in San Pedro.

Under the proposed tariff structure, SP
consumers will also be required to pay a minimum charge per month, which
supposedly will bring these customers "in line with the remainder of the
country." The minimum monthly water charge proposed in SP (up to the
first 1,000 gallons) will be $10 for Social and $22 for Low Consumption
consumers (the other two classifications do not apply). Thereafter, any
water consumption in excess of 1,000 gallons would be charged as follows:
1001-1500 $23, 1501-2000
$24, 2001 - 2500
$25, 2501 - 3000
$26.50, 3001-4000
$28, 4001-5000
$29.50, 5001 - 6000
$31.50, 6001-7000
$33.50, 7001-8000
$37.50, and 8000 or more
$37.50.

In a summary of the plan, BWSL mentions the costs
saved by choosing not to invest in a new
reverse osmosis plant in San Pedro. Instead, the company negotiated a
contract with Belize Water Limited to provide bulk supply to San Pedro
(re: BWL article, October
16th, 2003, in
The San Pedro Sun).

A number of challenges to BWSL operations were also
pointed out, such as the condition of the existing infrastructure at the
time of purchase. The plan noted that, although the average water
pressure increased 10 to 20 PSI, especially in Belize City, that these
improvements resulted in significant increases in leakage. Illegal
connections, coupled with leakage in the lines, account for almost 50% of
the water the company produces. The report later stated that, "At the
present levels, illegal connections are costing the company around BZ$1
million per annum. The cost burden caused by those who take water without
payment is an unfair imposition on those who are legitimate customers,
who now must pay to make up for these losses. BWSL explained that, "Gains
made in reducing leakage and theft of water (known collectively as
Non-Revenue Water or NRW) latterly, now need to be reinforced with some
legislative changes if the business is to maintain a low cost structure
in the future."

The report continued to elaborate on the changes in
operating expenses, which are directly impacted by NRW. As a result, the
costs associated with maintaining the existing pipeline will increase
considerably until the overall quality of underground "assets" has been
improved by making new investments.

The plan stated that, until the company
was financially capable of investing the significant resources and cash
required to bring sewerage services to the majority of customers, it
would renovate the existing sewerage assets. In reference to the San
Pedro Sewerage System, this amounted to replacing all the electrical
control panels, which were badly corroded due to the island's
environment. The next, and ongoing, island project was said to be the
replacement of five "lift pumps," in the sewerage system, "which will
also be completed during year three of the transition period."

Other island improvements included a new, elevated
storage tank which was constructed to facilitate increased water storage,
and more importantly, to control water pressure in this district.

A release issued by the PUC last week stated that the
Water Industry Act No. 1 of 2001 established their organization as the
regulator of BWSL. The Act empowered the Commission to assume the role of
economic regulator of the industry, thereby determining tariffs and
establishing quality of service standards to be employed by BWSL. The
25-year license issued to BWSL by the Commission, set terms and
conditions under which BWSL must operate. These included authorized
service areas and procedures for the establishment of Standards of
Performance and Codes of Practice.

Since 2001, the Commission has served as regulator for
BWSL, as the fully privatized water provider in a transition period,
which ends in March 2004. When privatization of the water company came
into being, it was with the explicit understanding that it would not
require an increase in tariffs and charges during this period. The
Commission was tasked with drawing up bylaws to establish the methodology
and processes for setting tariffs. It also established procedures for
Full Tariff Reviews and Annual Tariff Reviews, a regulated 12 percent
rate of return for BWSL, as well as methodology for funding water supply
to New Property Development.

The Full Rate Review Proceeding commenced
in October 2003 and could last five months, as prescribed by law. During
the process, the PUC must consult with consumers and interested parties
regarding its deliberations, in order to arrive at a final position on
the tariffs.

In accordance with the review, the PUC held a public
meeting in Belize City on Monday, November
10

th, 2003, to hear
comments on matters relating to the plan. The general public has until
November 30th, 2003 to
submit written comments and may obtain copies of the BWSL plan at the PUC
main office, located at #63 Regent Street, or at BWSL headquarters on
Central American Boulevard, in Belize City.

According to a release issued by BWSL last week, the
PUC will issue an initial written decision on the tariffs to be applied
in "Full Tariff Period," together with the reason for the decision, by
December 15

th.

Several dates are listed as deadlines for BWSL and
other interested parties to object to or submit written comments
regarding the decision announced by the PUC. The Commission must issue a
final decision on the matter by April
17

th, 2004.

Additionally, throughout the review proceedings, the
public will have access to all information as prescribed by Statutory
Instrument No. 67 of 2002. An updated copy of the FTRP scheduled shall be
maintained at the PUC office and at BWSL headquarters at the
aforementioned locations. Up-to-date information may also be obtained by
visiting the PUC website at
www.puc.bz.